April 24, 2014

FCC Should Support Pricing Innovation

Brent Skorup

Senior Research Fellow
Summary

The FCC’s net neutrality rules—struck down twice by the DC Circuit Court of Appeals—were a one-size-fits-all regulatory approach that prevented broadband providers from experimenting with new business models. Broadband provision is a two-sided market, as the Chairman acknowledges, and rigid rules constrain technology companies trying to innovate in the dynamic Internet marketplace.

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Below, Mercatus Center research fellow Brent Skorup comments on reports of the FCC's new Open Internet rule proposal:

The FCC’s net neutrality rules—struck down twice by the DC Circuit Court of Appeals—were a one-size-fits-all regulatory approach that prevented broadband providers from experimenting with new business models. Broadband provision is a two-sided market, as the Chairman acknowledges, and rigid rules constrain technology companies trying to innovate in the dynamic Internet marketplace.

For a decade, the FCC has been bogged down in the net neutrality debate, distracting the Commission from important industry trends like the IP transition of phone networks and Americans’ embrace of wireless technologies. Beneath the public interest rhetoric, net neutrality is an ideological view that disdains economic evidence and conventional theories of consumer harm.

The Internet is a global network of networks, and net neutrality slogans mischaracterize the economic and technological tradeoffs. The Chairman would be wise to put the net neutrality quagmire in the past and turn the Commission’s attention to FCC items like next year’s important spectrum auctions.

Mercatus Center scholars have proposed for years that the Federal Trade Commission, not the FCC, police ISP behaviors since the FTC has expertise in consumer protection and competition effects. Our scholars maintain that position, but if the FCC can focus enforcement to those areas, as the Chairman’s proposal indicates, consumers will ultimately benefit.